152: If You Want to Be a Profitable Entrepreneur, Listen to This

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Got a brilliant business idea? Great! But can you explain your unit economics, break-even point, or burn rate? Most people can’t—and that’s why they fail.

In this episode of Boosting Your Financial IQ, discover why financial literacy is the ultimate game-changer for turning ideas into profitable realities. From decoding lifetime gross profit to mastering the four levers of profitability, Steve reveals the essential numbers every entrepreneur and business leader must know.

Don’t miss out on the free tools and insights that can transform your career and business. Tune in now to elevate your financial game!

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This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendations. The Company is not affiliated with, nor does it receive compensation from, any specific security. Please see https://www.byfiq.com/terms-and-privacy-policy for additional important information.

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Episode Transcript

Speaker 1 (00:00):
Financial literacy, or a lack thereof, is the number
one obstacle that holdsindividuals back in business and
, in fact, it's the number oneobstacle that hurts companies
and causes companies to fail.
This is Boosting your FinancialIQ, where I help business
professionals with financialresponsibility to elevate their
careers and run profitablecompanies.

(00:20):
My hope is that you'll applythese lessons to achieve your
greatest ambitions, cheers andenjoy.
Picture this you have abusiness idea, and it's a really
good one, and you want to makeit a reality.
So you go to an investor topitch your idea.
But there's a major problem.
Immediately, they start divinginto the unit economics of your

(00:42):
business.
You scratch your head.
You're like what the heck areunit economics?
They ask you okay, what's youraverage revenue per customer?
How many customers do you needto break even?
What's your LTGP to CAC ratio,which stands for lifetime gross
profit to customer acquisitioncosts?
Or they ask you about your netrevenue retention rate or your

(01:03):
burn rate or your cashflowcompared to EBITDA.
You don't even know what EBITDAis.
They start asking you all thesequestions and then you realize
you are stuck and you just blewyour opportunity right.
This happens all the time.
Just the other day, I wastalking to one of my friends and
he was telling me about thisidea that he has for a SaaS

(01:23):
business all right, a softwarebusiness and I love the idea.
But then I started asking himabout his unit economics and he
just had a blank stare on hisface and he's like I know, I
need to figure that out, I needto refine that.
And it's like dude, you need tofigure out the unit economics
of your business to see if theoperating model even works.
Now you don't need to to godown this path, imagining all

(01:46):
the different scenarios and allthe things that could go wrong
with your company, but you dohave to understand.
Can you generate a profit basedon your operating model?
All right, so I like to startwith lifetime gross profit per
customer compared to yourcustomer acquisition cost,
especially if you're new,because you're going to have to

(02:06):
go out there and acquire newcustomers and you're going to
have to figure out what's itgoing to cost to acquire a new
customer and, based on thepricing that you're going to
charge, what is the gross profitof that customer over their
lifetime with you?
Right?
And when you compare that ratio, let's just say you look at
that first.
It needs to be at least threeto one and if you want to really

(02:27):
scale your business, it shouldbe like 10 to one, because over
time that ratio is going tocompress as you scale and as you
hire people for businessdevelopment and sales roles.
Ultimately it's going to godown.
So you want to start off with abigger number, knowing that
it's going to compress over time.
But that's just one example.
Like I said, understanding yourbreakeven point, your burn rates
, how much cashflow you need,what's your return on invested

(02:50):
capital or your economic profitall these things you have to
know and that's why financialliteracy is so critical.
Sometimes people are likefinances for the birds.
Accounting is for the nerds,right.
But if you want to besuccessful in business, let's
just say you have a businessidea and you want to make it a
reality.
If you don't understand thefundamentals of finance, you're

(03:12):
going to struggle to besuccessful.
I'm not talking about being anerd.
I never have.
I've never promoted the idea ofbeing a nerd wearing a green
shade in the back office, doingdebits and credits until the
trial balance ticks and ties.
That's the opposite of what Ipreach.
Instead, I'm talking about thefundamentals of finance.
Do you know how to read anincome statement, a balance
sheet, a statement of cash flows?

(03:33):
Do you know the four levers ofprofitability?
Do you know the unit economicsof your business?
Do you know the let's say fiveto 10 metrics that you should be
paying attention to todetermine whether or not your
company has a good strategy andwhether or not you are
generating value?
So these are all the thingsthat you need to know, and

(03:53):
because I'm so passionate aboutthis topic, you can tell I
created this passion projectcalled boosting your financial
IQ.
Right, and on the podcast andthrough my website and through
videos, I educate people in thearea of financial literacy, and
the reason why I do this isbecause financial literacy, or a
lack thereof, is the number oneobstacle that holds individuals

(04:18):
back in business and, in fact,it's the number one obstacle
that hurts companies and causescompanies to fail.
So I don't want you to go downthis path.
So, over the holiday breakbetween 2024 and 2025, I had
this revelation and I'm like mywhole mission is to educate
people.
So there are people across theworld that don't have access to

(04:40):
really good education.
Right, there are gatekeepers ofknowledge.
There are people that charge alot of money for courses.
I used to charge for my courses.
There are universities that aresuper expensive and all they do
is teach academic stuff and ittakes four years or five years
or six years to teach people inorder for them to get a
bachelor's degree or a master'sdegree.

(05:00):
So like there's gotta be abetter way.
And that's when I created thefinancial pro program.
There are over a hundredlessons.
It's my best stuff.
It's not some marketing ploy togive you just my cheap free
stuff.
That's incomplete.
Instead, it's good stuff.
It's my best stuff.
There are six levels.
You can become a financial proand guess what?
It's all free.
It's all free.

(05:21):
All right, no gimmicks, justknowledge.
So there's no excuse.
So if you want to be successfulin business, if you want to
kickstart a new venture, youhave to know your numbers.
Even if you're not raisingcapital and going to an investor
, you have to understand thenumbers behind your business.
That's the story behind yourbusiness.

(05:41):
That's going to be your reportcard.
That's going to tell youwhether or not you have the
economic capacity to even runyour business and make it
successful.
All right, that's what I wantedto share with you.
Until next time, take care ofyourself.
Cheers.